Omaha daily bee., 1887-08-03
HELD IN TRUST.
An Important Decision in the United
states Court.

In the United States court yesterday
morning in the case of Bates, Reed Il
Cooley against John and Matilda X. Nc.
Connell, Judge Brewer handed down an
important decision. Complainants are
judgment creditors Of John Mcconnell,
dry goods merchant who failed in Lin
coin in December, 1884. Two months
before failing he conveyed a large
amount of real estate to his wife
in payment of an alleged in
debtedness. A chattle mortgage was
given on stock, at the time of failure, to
Lincoln bank which had n 500, 900 claim
The bank took possession and began sell
ing stock to satisfy its claim. Other
creditors began attachment proceedings.
The stock was ample to pay the mort
gage as well as the claims of the attach.
ment creditors. Those claims were
placed in judgment, and the judgments
assigned by the creditors to
Mrs. Mcconnell for SO cents
on the dollar. These judgments
that half the amount really passed to
Mrs. Mcconnell. Complainants filed
this bill seeking to set aside the convey
ances to Mrs. Mcdonnell as fraudulent
and also to charge her as trustee for
their benefit, of tue amounts received by
her IN collection of those various judg-
ments.
1t is held that credl.or holding
valid claim can do with it as he pleases,
giving all or portion to the
wife of his debtor and if
such gifts made the wife takes the prop.
erty free from the claims of her husband.
So If these creditors had intended to give
half their claims to Mrs. Mcconnell, the
money she thus obtained would be hers,
frna f~< r1n;s, ,<Nf1 al &c h,
if they sold to her for fifty cents on the
dollar, or any other sum, and she paid
therefor out of her own money, she would
hold these judgments and the proceeds
free from any claim of complaints. The
court holds, however, that the assign
men. of the judgment to Mrs. Mcconnell
was not bona fide purchase by her, but
cents on the dollar after his failure, but
the larger creditors refused and
the scheme seemed to fall
through, the assignment being substl:
tuted. The whole thing was managed
by Mcconnell, and was simply a trans
action for the purpose of giving his wife
the proceeds of goods which should in
itors. The testimony of Mrs. Mcconnell
shows that she acted as her husband and
lawyer advised. The real transaction
must therefore be adjudged scheme of
MIR. Mcdonnell to prevent part of his
property going to satisfy his just debts.
This the law will not tolerate, and she
must be charged as trustee for the
amounts thus received for the benefit Of
complainants. AS to the conveyance of
the property to Mrs. Mcdonnell prior to
the failure in satisfaction of an alleged
just debt, it is undoubted that when Mr..
Mcconnell went into business in 1872 he
started with a capital stock of $4,000 to
$4,000 Of which $4,000 was paid by
Mrs. Mcconnell with land which was
her separate property. She testifies that
she took note for that amount, running
five years with 10 per cent interest. At
the end of five years the interest was
computed and a new note given for
1926, and at the end of another five
years this was again done. The first two
notes, however, made five years apart.
are on paper alike, written IN the same
ink, and are dated Lincoln, Neb. The
court believes that both were written at
the same time, although not doubling
that $l2,0 was paid at first. She Is en-
titled to be protected as q creditor to the
extent of 81, 600 and 10 per cent interest
to date as well as to the items of lndebt-
edness testified to. A computation in this
manner, instead of compounding, shows
that she has received property of
too great value for her debt. The excess
she should be held responsible for. The
decree therefore will be that she holds
the money received as the proceeds of
the judgments in trust for the complain
ants and that she pay it oyer in sixty days
or that execution issue therefor. If the
parties cannot agree on the amount the
clerk is to compute it, She is adjudged
as holding the other property as trustee,
first for the payment of her own indebt-
edness and second the balance due COM
plainants, and that master of the court